Partial marks are indicated in the brackets.
1.
At present output levels, a competitive firm finds itself with the following:
Output:
?
Market Price:
$2.00
Fixed Cost:
$4,000
Marginal Cost:
$2.25 and rising with increases in output
Variable Cost:
?
Total Cost:
$10,000
Total Revenue:
$20,000
Based on the information above, calculate the following:
(a) Total Output =
[3 Marks]
(b) Variable Cost =
[3 Marks]
(c) Average Total Cost (ATC) =
[3 Marks]
(d) Calculate the total profit/loss of the firm
[3 Marks]
(e) Can this firm earn more profit? If yes, what does it need to do? [3 Marks]
